Apple invested $300 million to build a cloud center at an internet and highway crossroads in North Carolina. The dream was that the cloud would bring jobs and growth to a community hard hit by foreign competition.

Certainly the cloud makes for a good enabler of telework and can help lower costs for businesses that are information-intensive.

There are costs, however. Local investments in such technology does not mean that there will be local jobs.

Apple got a $46 million state tax break in North Carolina to build one of its new cloud centers. The promise was that at least 250 jobs would be created.

So far the actual job count is perhaps 50 employed, or $920,000 in tax breaks per job. Combine state tax breaks with a local 50% reduction in Apple’s property taxes and it soon seems that Carolinians are paying their own wages via statewide taxes to work at the Apple cloud facility.

The future of jobs as one industry analyst frames such investments: “… in the newer digital economy, capital investments that a generation ago would have created thousands of new positions often equal only a handful today, with computers and software processing the heavy lifting while the key programming is often done by engineers back in Silicon Valley.”

The cloud also is a two-edged sword. So while the cloud enables telework and can help lower costs for businesses that are information-intensive, it can also be the vehicle for transferring work to whereever the work can be done at a lesser cost.

For communities such as the one in North Carolina that hosts the Apple cloud facility, the cloud may well cost them more jobs than it will create unless they find a way to harness the power of the cloud rather than just have it live in their backyard while paying for its existence through tax credits and lost state tax revenue which they will pay through other forms of taxation.

2 responses to “When is a cloud just a dream — rather than a savory Apple pie?”

Nothing new about this scenario. Intel decries Arizona’s investment in education while getting more and more in tax breaks each year and having it’s land be property tax free. It’s considered a free trade zone. We also pay them to hire people so in reality I’m subsidizing a large profitable multi-national company while the local schools and universities face increasing budget cuts.

To me this seems to be a question of whether the glass is half empty or half full. Apple was able to work a very lucrative “deal”–for them the glass is hafl full. For the 200 people of Maiden, NC who didn’t get a job, the glass is half empty. The same can be said for the taxpayers of North Carolina. But, I would say this–at least Apple put their cloud facility in the United States–they could just as easily have put it anywhere they wanted. The tax incentives will end eventually and I don’t think Apple will abandon a $300 million facility. Ultimately the folks of North Carolina will win.